Juggling Dynamite

The salad days of near-zero interest rates enabled excess demand and price-insensitive buying across most sectors all at once; that included art markets. After a euphoric frenzy peaked in 2022, art prices have been falling since, and a world of feeder sectors and businesses is contracting along for the ride. See, The Storm Hits the Art Market:

The art world is in a precarious state as it heads into the second half of 2025. Not a week goes by, it seems, without a major gallery closing: Blum, Venus Over Manhattan, and Kasmin are other prominent summer casualties. Smaller galleries are exiting and downsizing discreetly. Each case is different, but many voice the same laments: Overheads are killing businesses. Sales are down. It’s no longer fun. Primary pricing is untenable. Major collectors have stopped buying art or significantly reduced their spending. The next generation isn’t there to take over from the old guard. The art world has become bloated, and there isn’t an easy way to cure the malaise.

“I don’t believe for one second that it’s cyclical,” Belgian collector and art market commentator Alain Servais told me. “It’s structural. The infrastructure is too big. There are too many advisors, too many galleries, too many artists, too many fairs. Everything will need to downsize. In my blunt opinion, blood will flow in the streets before the art market finds a new balance.”

The contraction started quietly after Art Basel in 2022, but the disastrous results for Gerald Fineberg’s collection at Christie’s the following May brought it into the open. Fine-art auction sales during the first half of 2025 totaled $4.72 billion, down 8.8 percent from the same period a year ago and down 40.9 percent from 2022’s first half, according to the Artnet Price Database.

The Art Dealers Association of America decided to cancel its popular Art Show this year.

Backward-looking job revisions show the US and Canadian economies have been producing fewer and fewer jobs amid rising unemployment. Mass layoffs are due next. EPB Macro’s Eric Basmajian explains in the segments below.

This video analyzes why elevated profit margins are giving businesses more room and time to absorb slowing economic conditions without resorting to wide-scale layoffs. But the labor market cracks are widening. Here is a direct video link.

Home prices follow employment lower. This video analyzes the sequence of the residential housing cycle. Here is a direct video link.

Statistics Canada housing data shows that, in 2021, across the provinces, 15–27% of houses were owned as an investment/secondary property (i.e., not an owner’s primary residence)—with PEI 27%, Nova Scotia 20%, Ontario/Manitoba/New Brunswick/B.C. generally in the mid-teens.

Condos skewed higher, with 30–42% of condo apartments owned as secondary properties in the provinces studied. (Perspectives Journal).

In related data, as shown in the table below, 30 to 40% of the property stock in Ontario, BC, New Brunswick and Nova Scotia is owned by multiple property owners. (Statistics Canada).

In the US, Reventure estimates that 25% of the housing stock is owned by those who do not use it as a primary residence.

Aging and leveraged owners are increasingly looking to downsize real estate exposure in many areas all at once. This is a macro theme with legs.

Real estate investors are releasing a major housing market warning, with Redfin reporting the biggest drop in investor purchases in 2 years occurring in Q2 2025. This data from Redfin suggests real estate investors are continuing to exit the housing market, and that buying conditions are still very weak in 2025. The result is that inventory and price cuts are now rising in markets with the most investor exposure, resulting in home price declines. Here is a direct video link.

Find a house for cheap in Florida, sellers are stuck and Zillow is NOT showing the price drops in the MLS. Here is a direct video link.

Move Smartly Editor and Host, Urmi, once again speaks to John and Steve on what is going on in the data and on the ground in Toronto and Vancouver. This month, more sales but some surprising price drops continuing not only in condos but house sector. Plus, how will interest rates, economic uncertainty and headlines about a condo market collapse play into consumer sentiment? And, an Ontario real estate brokerage scandal puts (another) black eye on the industry. Here is a direct video link.